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Tesla Stock Split: Analysing the scope of yet another stock split of Tesla’s Stocks in the recent future.

With so much momentum and share price touching new heights with every passing month, Tesla is ready for yet another stock split.

Tesla Stock Split: Tesla Stock Split in August 2020

  1. Tesla announced a 5-1 stock split in the month of August 2020 which became effective from 31 st August. Tesla was trading at $2230 just before the split and the sky-high share price came down to a more accessible $446 on August 31st. Shareholders who previously held one share now owned 5 shares.
  2. When Tesla announced a split, the company had multiplied its revenue by six over the past five years, bringing total revenue from $4 billion to $24 billion at the end of 2019. Gross profit had also likewise increased from $924 million to $4 billion.
  3. At the same time, Tesla’s pricier models fell production fell from 17% of all vehicles produced in 2019 to 15%by the first quarter of 2020, while Model 3 and Model Y production increased three percentage points over the same period.
  4. Ultimately, splitting the stock was used to depict as a means of making products more accessible. Not only does it create an opportunity for the investors with more limited funds to buy in, but it also created a buzz among the consumers looking for an accessible “luxury product”.
  5. Tesla itself enticed the investors by lowering the bars for entry while maintaining the standards, and those who were on the fence had more reasons to buy than before. It had cascading effects and served as a great catalyst for the company.
  6. The launch of Model 3 in China met with great demand and became the best-selling electric vehicle. Similarly, in the US, the Model Y launch generated great demand which was much more than the earlier demand of Model 3. Ultimately, the stock split created a perception that Tesla products are accessible, and demands shot up helping the company and share price both.

Also read: Tesla Stock Forecast

Also read: Best EV Stocks to buy

Also: Tesla Latest News

Tesla Stock Split: Latest Tweets

Originally tweeted by Kenneth Koh (@kennethkhp) on January 7, 2022.

$TSLA. Sadly, Dec jobs report caused panic on Fri but effectively nothing changed. It is Jan & Feb CPI & Jobs which will be more impt

More $TSLA catalysts over the next few wks:
1. Q4 Earnings strong EPS beat
2. Berlin & Austin start production
3. Possible stock split Q1 (by 1 Mar)

Originally tweeted by Voltrader_ 思辨😂iscool (@readtw271) on January 10, 2022.

The way $tsla has been traded the last few days
~= market has found a solid bottom/floor for $tsla : $1000

~= new ATH very likely in Q1, 2022

@elonmusk : & I will do a stock split as well in 2022😂

TESLA Tesla Stock Split: Tesla Shares Are Ready for yet Another Split

  1. Last summer, when Tesla stock was around $1300, Elon Musk felt that shares are too expensive and believed that a larger chunk of the public should be able to afford Tesla shares and that announcement was soon followed by 5-for -1 stock split. After 15 months, and Tesla stock is approaching similar levels, the reason being a spectacular surge this year.
  2. But this has led to speculations that Musk will announce another share division to appeal to retail investors. The analysts and investors are divided over the speculations and while investors are hoping for a similar split soon, some analysts claim that Tesla valuations do not make any sense.
  3. It is true that Tesla is worth more than any other automobile manufacturer combined, but at current valuations, its price/earnings ratio is 50X higher than any other competitor and Tesla would have to be in business for 20 to 30 years to catch up to that kind of valuation.
  4. Adding more to the above point, analysts’ claim that Tesla would be required to sell 31 a million cars by 2031 to justify its current price tag. But the contrary view is that traditional valuation metrics cannot be applied to compare a company like Tesla with original car manufacturers like Ford and Toyota.
  5. Tesla’s intangible assets like its brands, patents, and goodwill should also be considered in valuation metrics and price predictions. The argument is that Tesla is a technology company masquerading as an auto company and the value of Tesla’s data holds tremendous potential as data applications could include Artificial intelligence, software services, and other applications.

Also read: Apple Stock Forecast

Tesla Stock Split: Bottom Line Choice in Case of Tesla

  1. It is clear that Tesla 5- for -1 stock split was beneficial both for the company and its shareholders. And it is evident that Tesla’s share has reached similar levels but that is backed by increasing sales, increased profitability, and increased attention for its forward-looking products.
  2. It is not mandatory that stock split has always received such a response, but the company’s fundamentals dictate the terms and price action following it. For Tesla, it was on the positive side, as Tesla products and share both are darling for retailers and common people.
  3. It is not clear whether Tesla will announce a stock split in the near term or not, but what is clearer is that it will continue to grow with time and outperform its competitors in terms of sales and profitability.
  4. Some analysts are on the side of a share split, just because they see it as a marketing strategy, and also adding more shares could help boost executive compensation. Although share being more affordable is just a perception and not reality, investors are marketed by the concept of buying the shares for a lower amount.
  5. According to analysts, Tesla will witness a parabolic rise, and any split in the near term will be bullish for the stock as long Tesla maintains its true identity and retailers believe in the brand.


Tesla Stock Split: What’s a Stock Split?

  1. First, it is very important to understand what a stock split is. The most important thing to know is that it technically does not make investors any wealthier and does not give the company whose shares are being split any incremental capital. A stock split in simple terms means the division of one share into multiple shares but the total value remains the same as of the original share.
  2. Analogically, it is similar to dividing existing food into four or five pieces but overall food remains the same. Similarly, shareholder ownership does not change before and after a stock split.
  3. One of the primary reasons, companies do stock split is to make shares more affordable to retail investors. This makes the company’s shares more liquid and accessible to more investors which is likely to give a boost to share price, but the same is not always true.

Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

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